Do you need an LLC or an EIN before you start a Shopify store?

Now a quick note on dollar figures. Filing fees for an LLC change, and the amounts below are from each state's own page, checked October 15, 2026. Check the linked state page before you pay anything. We recheck these figures every month.

Quick picks

What do LLC, EIN, sole proprietor and the other words mean?

So most pages on this topic throw these words around without explaining them. Here is what each word means.

• Sole proprietor is what you automatically are when you sell things on your own without registering any other kind of business. The SBA says your business assets and debts are not separate from your personal ones.
• LLC stands for limited liability company. You create one by filing with your state. The SBA says an LLC protects you from personal liability in most instances.
• SSN and ITIN are the two kinds of tax number the IRS gives a person. SSN is your Social Security number. An ITIN is a second kind of personal tax number that Shopify also accepts.
• EIN stands for Employer Identification Number. Basically, it's a tax number the IRS gives a business.
• DBA means "doing business as." It's a business name that isn't your own legal name.
• Sales tax permit is a registration with your state's tax office. It lets you collect sales tax from customers. Some states call it a seller's permit.

What does Shopify require before I can take payments?

So here is what Shopify's own rules say. This is a Shopify rule, not a law, and it's the part that decides what the signup screen asks you for. Shopify's US requirements page for Shopify Payments, checked October 15, 2026, lists these business types.

So a person with no LLC and no EIN picks "Individual." And Shopify uses the name "Sole Proprietorship" for a person who already has an EIN. Shopify's own blog post on EINs describes sole proprietors using their SSN. But the Help Center page decides what the signup screen asks for, so I go by the Help Center names.

Something to note is what Shopify's Terms of Service (the August 1, 2026 version, checked October 15, 2026) say. Four points matter here:

• You must be 18 or the age of majority where you live, whichever is older.
• You use Shopify for a business purpose, not for personal or household use. That means you should think of the store as a business even if it's a side job. The terms don't say you must register a company.
• The store must show the store owner's name, and the legal name of the company that owns the store, if there is one.
• You are responsible for the taxes that come with your Shopify subscription and your sales. The terms don't say you need a business license or permit to open a store. They name a business license only as one document Shopify may ask for if there's a dispute over who owns an account.

What kind of bank account does Shopify pay me into?

Shopify's requirements page says payouts go to a Shopify Balance account or to a full checking account at a US bank in US dollars. So Shopify asks for a checking account, not a business bank account. The page says wire-only checking accounts, savings accounts, multi-currency accounts and money transfer service accounts aren't supported.

What if Shopify can't verify my details?

Shopify's page says Shopify asks for a photo of your ID when it can't verify your identity details. When it can't verify an EIN, Shopify asks for an IRS document: the SS-4 confirmation letter, Notice CP575 or Letter 147c. The registered name and the EIN must match the IRS record exactly. Shopify says documents must be original photos, not scans or screenshots. A document you got digitally goes in as the original PDF.

Does Shopify want all nine digits of my Social Security number?

So the answer here isn't fully settled. The Help Center page says "SSN or ITIN" and doesn't give a digit count. In Shopify Community threads in 2022 and 2023, Shopify staff said US sellers must enter all nine digits, even when they also have an EIN. A community member's reply in 2025 said only the last four. Those are forum posts, not Shopify's rules, so the signup screen is what counts.

Do I need an EIN to sell on Shopify?

So no, you don't need an EIN to open a Shopify store as an Individual. What the IRS says is the law side of this question, and every IRS page below was checked October 15, 2026.

• An EIN costs nothing. The IRS says "You never have to pay a fee for an EIN." You apply on IRS.gov. If the application is approved, you get the number right away. The IRS EIN page warns about websites that charge for one, and the SBA says the same.
• The IRS lists when you do need one. Its Employer ID numbers page says you need an EIN if you have employees, pay employment or excise taxes, or withhold tax on certain payments to non-resident aliens. A one-person seller with no employees isn't on that list.
• You can get one anyway. The same IRS page says you can still request an EIN "for banking or state tax purposes" if you don't need one for federal tax.
• You need a new EIN if you later incorporate or form a partnership. The IRS page on when to get a new EIN says changing your business name or location, or owning more than one business, doesn't need a new one.

Why would I get an EIN if I don't have to?

Now this part is practical guidance, not a rule. Here are the reasons a seller might get a free EIN anyway.

• You can give out the EIN instead of your Social Security number on some forms. The IRS says the EIN is free and fast to get. Shopify is not one of those forms: Shopify's Help Center says Shopify Payments still asks for your SSN or ITIN when you sign up with an EIN.
• A bank may ask for one when you open a business account. The SBA's business bank account page lists the EIN, or your Social Security number if you're a sole proprietor, as something banks commonly ask for.
• Shopify's "Sole Proprietorship" business type asks for one.
• You plan to hire someone, since an employee is when the IRS says you need one.

So if none of those apply to you, you can start as an Individual and get the EIN later. And if one does apply, the IRS application is free, so there's no reason to pay a filing company for it.

Do I need an LLC to sell on Shopify?

So no. Neither Shopify's Help Center page nor its Terms of Service say you must form an LLC to open a store. A Shopify staff member also wrote in a Shopify Community thread started in 2021 that registering a business isn't required to sell on Shopify and that sole proprietors are allowed. Forming an LLC is a separate choice, and it's about legal protection, not about permission to sell.

What does an LLC actually do for a one-person seller?

• It can protect your personal assets. The SBA says LLCs protect you from personal liability "in most instances." Basically, that means debts of the business are kept apart from your own savings and home. How well that works in your state is a question for a business lawyer, not for me.
• It does not lower your federal income tax by default. The IRS page on single-member LLCs (dated July 27, 2026) says an LLC with one owner is treated as not separate from the owner for tax. Its income goes on the owner's own tax return. The owner pays self-employment tax the same way a sole proprietor does.
• It costs money to form and to keep. The table below shows four states.

What does it cost to form an LLC in four states?

These are filing fees only. They leave out a lawyer, a registered agent service (a company or person your state requires to receive legal papers for the LLC) and any local fees. Each figure is from the state's own page, checked October 15, 2026. Rules and fees differ in every state, and these are four examples.

To see how this adds up, take California. The first year is $70 to form plus the $800 annual tax, which is $870 before the $20 Statement of Information. A sole proprietor pays $0 to be a sole proprietor. California once let new LLCs skip the first-year $800, but that only covered tax years beginning 2021 through 2023, according to the Franchise Tax Board page.

What do I owe either way, with or without an LLC?

So this is the part that no LLC and no EIN changes. These are the law, from the IRS, and each page was checked October 15, 2026.

• Your income is taxable. The IRS's Form 1099-K FAQ says "All income, no matter the amount, is taxable unless the tax law says it isn't." That holds even if you don't get a Form 1099-K. A 1099-K is a form a payment company can send to you and the IRS, listing what you were paid.
• The current 1099-K reporting threshold is over $20,000 and over 200 transactions. The IRS says so in its October 2025 announcement. Many videos still quote older, lower figures. That threshold only decides whether a form gets sent. The IRS says it doesn't change whether the payments are taxable.
• A sole proprietor reports the business on Schedule C with their personal return and pays self-employment tax on Schedule SE, according to the IRS's sole proprietorships page. Self-employment tax is the tax a self-employed person pays on their own earnings.
• The self-employment tax line is $400. IRS Topic 554 says you usually must pay self-employment tax if your net earnings from self-employment were $400 or more.

Is my store a business or a hobby?

So the IRS doesn't decide this with one dollar number. The IRS fact sheet on hobbies and businesses (from October 2022, and the IRS notes news items may not be updated) says the IRS looks at facts and circumstances. Those include whether you run the store like a business, how much time and effort you put in, and whether you expect a profit. Income from a hobby still has to be reported. If you're unsure which side you're on, an accountant can tell you.

What state and local rules apply?

So these depend on where you live and what you sell. This is law, and it differs by state, county and city. The SBA's licenses and permits page says most small businesses need a combination of federal and state licenses and permits. The SBA also says local governments decide registration and licensing requirements. You may need licenses from your county or city, and zoning rules can apply even to home-based businesses.

Do I need to register a business name?

The SBA says "If you conduct business as yourself using your legal name, you won't need to register anywhere." If you use a different name, you might need to register a DBA. The rules vary by state, county and city. The SBA also says registering a DBA doesn't give legal protection by itself.

For example, Texas's Secretary of State page on name filings says a sole proprietor files an assumed name certificate with the county clerk where they have a business office. The page doesn't list county fees and tells filers to ask the county clerk. Checked October 15, 2026.

Do I need a sales tax permit?

Basically, sales tax is a tax added to what a customer pays, and the seller sends it to the state. A sales tax permit is the registration that lets you do that. Shopify's taxes help page, checked October 15, 2026, says tax is your responsibility. It also says that if you need to collect sales tax, you must register with your local or federal tax authority. Shopify doesn't file or send the tax for you unless you use Shopify Tax with automated filing.

None of the three state pages below says you need an LLC to get a permit. Each was checked on the state's own site on October 15, 2026.

• Texas: the Comptroller's permit page says to apply if you're "engaged in business in Texas" and sell taxable items or services. Applicants must be at least 18. The page lists no application fee and says to allow 2 to 3 weeks to receive the permit.
• California: the California Department of Tax and Fee Administration says "There is no charge for a seller's permit." The department's FAQ says a security deposit may be required, with the amount set when you apply.
• Florida: the Department of Revenue's sales tax page says businesses that sell taxable items must register to collect sales tax. It also says a return must be filed each reporting period, even if no tax is due. The page doesn't mention a registration fee.

Who has to collect sales tax, and in which states, depends on where you and your customers are. Your state's tax office or an accountant can tell you for your own case.

Which parts are law, which are Shopify's rules, and which are opinion?

When is starting without an LLC or EIN the wrong choice?

So here are the cases where my plain answer changes.

• If you have employees or plan to hire, then you need an EIN. The IRS says so.
• If you live outside the US, then this page doesn't cover you. Everything here is about US sellers and US dollars.
• If you're under 18, then Shopify's Terms of Service say you must be the older of 18 or the age of majority where you live.
• If you're worried about your home and savings being at risk, then an LLC may be worth asking a business lawyer about. But otherwise, an LLC isn't something you have to decide before opening the store.
• If you're starting the store with a business partner, then the tax and legal setup is different from a one-person store. An accountant and a lawyer can lay that out for you.

Videos worth watching about licenses and business setup

And if you'd like to hear this explained out loud, here are two videos. You can play each one right here, and YouTube's usual controls work. Under each video I've put a quick summary so you can decide if it's worth your time. Neither video is a source for any dollar figure on this page.

Who should I ask to be sure?

This page is general information, not legal or tax advice. Here is who to ask for each question.

• Tax questions such as what you owe, hobby or business, and estimated tax: an accountant, a CPA or an enrolled agent.
• Protection questions such as whether an LLC would protect your home and savings: a business lawyer.
• Sales tax permit questions: your state's tax office, for example the Texas Comptroller, California's CDTFA or Florida's Department of Revenue.
• City and county license questions: your city or county office. The SBA's licenses and permits page is a good place to start.